Northern Powerhouse peer quits Treasury and Tory benches

One of the architects of the so-called Northern Powerhouse project, Lord O'Neill, has resigned from the Government and quit the Tory benches in the upper house.

In his letter of resignation to Prime Minister Theresa May, the peer made pointed reference to his belief that the devolution of economic and financial controls to Northern cities, and a close business relationship with China, were both vital to the UK's post-Brexit success.

Lord O'Neill used the letter informing Mrs May of his decision to stand down as Commercial Secretary to the Treasury to note there had been speculation she was not keen on both areas of policy which were key themes of David Cameron's administration.

Lord O'Neill of Gatley, the Commercial Secretary to the Treasury, who has resigned from the Government

However, the peer stated that despite concerns expressed regarding Mrs May's attitude to the Northern Powerhouse project and economic ties with China, both areas now appeared to be commanding the Prime Minister's attention.

Lord O'Neill told the PM he had primarily joined the Government "for the specific purpose of helping deliver the Northern Powerhouse, and to help boost our economic ties with key growing economies around the world, especially China and India and other rapidly emerging economies.

"The case for both to be at the heart of British economic policy is even stronger following the referendum, and I am pleased that, despite speculation to the contrary, both appear to be commanding your personal attention.

"I am leaving knowing that I can play some role supporting these critical initiatives as a non-governmental person."

The former Goldman Sachs chief economist, who also chaired the review into antimicrobial resistance and has just returned from the UN where delegates signed a landmark declaration to tackle the threat, took the unusual step of quitting the Tory benches in the Lords.

In his resignation letter to the Prime Minister, Lord O'Neill of Gatley said he is looking forward "to moving to the cross benches of the Lords".

Ed Cox, director of IPPR North, said: "It is a great shame that Jim O'Neill is standing down from this important role as he has been an important champion within government for the Northern Powerhouse. The Prime Minister has been very clear in her support for the Northern Powerhouse and IPPR North has always argued that the Northern Powerhouse is not so much a government programme as the sum total of economic activity that makes up our £300 billion economy.

"Ministers will come and go, but it is the businesses, innovators and investors in the North that will ultimately unlock our economic potential."

Former chancellor George Osborne has insisted the Northern Powerhouse initiative must go ahead, despite some critics of Mrs May fearing she is not keen on the project.

The PM has also been accused of sending conflicting, and economically damaging, messages to Beijing with her decision to review Chinese investment in the Hinkley Point nuclear power plant before giving her consent to the deal.

Leader of the House of Lords, Baroness Evans of Bowes Park, said: "Jim's work on antimicrobial resistance, commitment to developing the Northern Powerhouse and emphasis on our relationship with China have played an important part in developing Government policy.

"I wish him all the best as he leaves the Government to pursue new projects and look forward to his contributions from the cross-benches."

Labour's shadow minister without portfolio Jon Ashworth said: "This is a huge blow for the Prime Minister and she's only got herself to blame.

"A much respected minister has not only walked out on her after just three months, but even more damning, has abandoned the Tory Party altogether over her divisive lurch to the right in attempting to bring back grammar schools. If Theresa May had any sense she would ditch this regressive policy now.

"What's more, his reported concerns over Hinkley and the Northern Powerhouse are yet more evidence of a Prime Minister whose basic competence is more and more being called into question."